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in Petaluma, CA
Petaluma buyers face a choice between conventional financing and VA loans if they qualify for military benefits. The decision changes your down payment, monthly costs, and total interest paid.
Most veterans I work with assume VA is always the winner. It usually is, but not for every Petaluma property or scenario.
Conventional loans require 3% down minimum for first-time buyers, 5-20% for others. You pay mortgage insurance below 20% down, which adds $150-300 monthly on most Petaluma homes.
Credit requirements sit at 620 minimum, but expect better rates above 740. These loans work for any property type including condos and investment homes.
VA loans require zero down and charge no monthly mortgage insurance. You pay a one-time funding fee of 2.15-3.3% unless you're disabled, which can be rolled into the loan.
Credit standards are flexible, often accepting 580-600 scores. Sellers pay your closing costs in most Petaluma deals, lowering cash needed at closing to nearly nothing.
Down payment separates these options most dramatically. VA borrowers keep their cash while conventional buyers need $20,000-$40,000 saved for typical Petaluma starter homes.
Monthly costs favor VA even more. A $700,000 Petaluma purchase costs $200-250 less per month with VA versus conventional at 5% down once you factor in mortgage insurance.
Use VA if you're eligible, period. The zero-down benefit matters more in Petaluma than cheaper markets because you preserve $30,000-$50,000 in liquidity for repairs or reserves.
Conventional makes sense only when the property won't pass VA appraisal standards or you're buying a multi-unit investment. Some Petaluma sellers also resist VA in competitive situations, though that's illegal discrimination.
Yes, but VA appraisers check safety items closely. Peeling paint, foundation issues, or outdated electrical can kill the deal unless sellers fix them first.
Yes, you finance more principal. But the monthly savings from no PMI usually outweigh the extra interest cost on VA loans.
Some worry about appraisal delays or repair requests. A strong offer with quick closing and appraisal gap coverage solves this problem.
Only with 10%+ disability rating from the VA. Otherwise you pay 2.15-3.3% upfront, though most borrowers finance it into the loan.
For investment properties, condos with low VA approval rates, or major fixers that won't pass VA appraisal minimum property requirements.